Shaw buys Enmax for $225-million to boost Internet muscle

Shaw Communications Inc. said Monday it plans to buy a Calgary-based high-speed data operator for $225-million in a move to bolster its own business Internet services in that city.

Shaw said it reached agreements with Alberta utility Enmax Corp. to buy its subsidiary Enmax Envision Inc. and plans to finance the deal using cash on hand and an existing credit facility.

Brad Shaw, chief executive of the telecommunications and media company, said the deal to purchase the operator of “one of Calgary’s largest fibre-optic networks” would “create a very competitive value proposition” for the city’s business customers.

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Analysts characterized the transaction as relatively small but generally positive for Shaw.

RBC Capital Markets’ Drew McReynolds said the deal is consistent with Shaw’s “long-standing growth strategy of penetrating the Canadian business market.”

He added that it could help Shaw move from what is the $1.5-billion small- and medium-sized business market in Western Canada into the $3-billion addressable mid-market and could generate about $250-million in annual revenue.

“On the positive side, [the deal] should diversify revenue streams and modestly enhance growth,” said Canaccord Genuity’s Dvai Ghose, adding that on the negative side, such businesses can be very capital intensive and hurt cash flow.

Shaw, which operates cable, Internet and home phone services in Western Canada, said in a release both companies are committed to quickly closing the transaction, which was announced after markets closed Monday.

Enmax Corp. itself is a wholly owned subsidiary of the City of Calgary and reported net earnings of $225-million in 2012, according to its website.

It attracted media attention in 2011 when its then-CEO Gary Holden resigned following a CBC report that he took a trip to Monaco in 2008 funded by a software company that had a deal with Enmax.

In January Shaw and Rogers Communications Inc. announced an asset swap worth $700-million.

Under that deal Shaw will pick up the remaining one-third stake it does not own in TVTropolis for $59-million and sell its Hamilton, Ont.-based Mountain Cablevision to Rogers for $400-million.

Shaw has also given Rogers a $50-million option to acquire the AWS spectrum licenses it bought in the 2008 auction in September 2014.

Related to the revised BCE Inc. proposal to buy Astral Media Inc., Shaw Media also agreed in early March to sell its 49% stake in ABC Spark to Corus Entertainment Inc., which is buying a handful of the divested Astral assets. Corus is selling its 20% interest in Food Network Canada to Shaw, which also owns the Global television network.